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Class Certification Requirements in 401(k) Fee Litigation (PDF)

"The basis for granting certification has frequently been the offhand observation that the class was complaining of the plan's structure as a whole. [The Spano and Kraft cases] indicate that, while class certification remains possible in cases involving 401k plans, the potential conflict between various categories of plan participants requires narrower definitions of the class that align."

Impact of Platform Provider Carve-Out on 401(k) Plans Remains Unclear (PDF)

"Like its predecessor, the new carve-out would likely have a substantial impact on platform providers that deliver advisory services regarding the selection of plan investment alternatives. This activity would prevent them from relying on the carve-out, even if the required disclaimers were made. This would be especially true for those platform providers delivering such services in exchange for any type of direct or indirect compensation. These providers could provide nonconflicted advice by adopting an asset-based fee, although this change would require the provider to become registered as an investment adviser. The alternative would be to restrict the advice rendered in accordance with the proposed carve-out and continue to receive variable compensation."

IRS Creates Level Playing Field for Suspensions of 401(k) Safe Harbor Contributions (PDF)

"Since the new rules will apply to both matching and nonelective contributions for plan years beginning after 2014, it would be advisable for all employers who may wish to make a mid-2015 reduction to or suspension of their safe harbor 401(k) plans to provide the updated notice in 2014 unless it can confidently be predicted that the employer will be operating at an economic loss in 2015."

Recent Developments in Forfeiture Cases (PDF)

"To date, we count twenty forfeiture lawsuits filed in a variety of jurisdictions (although predominantly in Federal Courts in California). Five decisions on Motions to Dismiss have been issued so far -- two favoring plaintiffs and three favoring defendants. Two of the three favoring defendants ... however, were without prejudice to plaintiffs filing amended complaints.... [A recent complaint filed against Knight Smith alleges] that the plan documents required forfeitures to be used to pay plan expenses first before they could be used to reduce employer contributions."

The Need to Investigate Collective Trusts (PDF)

"Some recent Court decisions have taken different approaches to the issue of a plan fiduciary's obligation to consider collective trusts and insurance company separate accounts as alternative investments to mutual funds.... Although the failure to consider collective trusts and separate accounts may not be a breach of fiduciary duty, it may be an evolving best practice for the applicable plan fiduciary to at least consider such alternatives."

Be a Functional Fiduciary Without Doing Anything: Seventh Circuit Rejects DOL's Theory (PDF)

"In ... Liemkuehler v. American United Life Insurance Company, the [DOL] filed an amicus brief [arguing that] an insurer offering investment options under a group annuity contract [should be held] responsible as a fiduciary on the ground that the contract gave the insurer management control over plan assets.... [T]he insurer merely invested plan monies as directed by participants.... In other words, in the right circumstances, a service provider could exercise the requisite authority over plan assets and become a fiduciary by doing nothing. In the view of the Seventh Circuit Court of Appeals, this '"non-exercise" theory of exercise' was not only unworkable, but unsupported by precedent."

Bidwell Case Confirms that QDIA Safe Harbor Applies to Re-Enrollments (PDF)

"The failure of the plaintiffs in [Bidwell v. University Medical Center, Inc. (6th Cir. 2012)] to respond to the request for a new election was the critical condition enabling the plan sponsor to claim protection of the QDIA safe harbor. The court deferred to the DOL's interpretation that the safe harbor applies beyond automatic enrollment to 'any other failure' of a participant to provide investment instruction."

Review of DOL Amicus Filings' Effect on an Investment Advice Fiduciary (PDF)

When the Department of Labor issued proposed regulations in October 2010, it expanded the definition of an investment advice fiduciary. The DOL indicated that one of its reasons for proposing the update was to support its enforcement efforts by making it easier for its litigators to prove the five elements necessary to confer fiduciary status. Sometimes, this works the other way around, and the DOL's litigation arm can be seen as supporting and, in the eyes of some observers, enlarging the consequences of policy objectives.

DOL Offers Tips on TDFs (PDF)

"The DOL suggests that the process for comparing and selecting a TDF should entail consideration of the fund's prospectus, which would include the fund's historical performance as well as fee and expense information.... Beyond the prospectus, the DOL recommends that TDF providers be questioned on the impact that plan demographics ... will have on the investment."

Case Suggests that RFPs May Be Necessary to Fulfill Fiduciary Duties (PDF)

DOL regulations regarding fiduciary responsibility require that fees paid by a 401k plan to its service providers be reasonable. Most 401k sponsors probably believe that hiring consultants to advise them on whether a recordkeeper's fee schedule is excessive is sufficient to satisfy the sponsor's fiduciary responsibility.... A recent decision by the U.S. Court of Appeals for the Seven Circuit concluded, however, that relying on consultants was not adequate.